The blockchain has a problem — it is really, really backlogged. As bitcoin has gotten more popular, the number of people trying to use it has grown, and along with it the number of transactions on the good old blockchain technology that underpins bitcoin. The problem is that verifying all those transactions has slowed due to the most profound backlog bitcoin has ever experienced — the number of transactions awaiting verification is up more than fivefold from a year ago.
This is making it expensive to use bitcoin because users are paying ever-rising fees to speed up those confirmations. Which kind of takes out an essential benefit of digital currency, as it some cases it is more expensive to use than Visa Inc. or PayPal Holdings Inc.
But while the problem is known, solving it divisive to the point that some of bitcoin’s most senior users are giving up on find consensus are are just backing a new plan called Bitcoin Unlimited.
If BU works out, the congestion will be relieved and everyone can be friends again. If not — bitcoin might be about to hard fork into two currencies.
“We will switch our entire pool to Bitcoin Unlimited,” Wu Jihan, founder of the world’s largest mining organization Antpool, said in an interview on March 10. His group accounts for 15 percent of blockchain activity and is hugely influential in the community. “We can’t tell how the hard fork will play out. We will only know by the time we get there.”
Wu is backed by Roger Ver, an early evangelist who amassed a fortune and got to be known as Bitcoin Jesus.
“We need to get to 60 or 70 percent of miners on board to activate Bitcoin Unlimited,” Ver said in an interview at his office in Tokyo on March 9. “Combined with others, I’d say we’re already close to halfway to our goal at this point.”
Bitcoin Unlimited is essentially a software upgrade to the blockchain that will undo a data cap that limits what the blockchain can process. That was created as a safety measure against potential attackers who could overload the system. Now Bitcoin Unlimited supporters say the blockchain is all grown up and doesn’t need that protection.
Needless to say — that is not everyone’s opinion
Critic Peter Todd, a key coding contributor to bitcoin, says that removing the data cap will make bitcoin vulnerable to governments and global banks.
“Bitcoin Unlimited is simply irredeemably broken,” Todd said in an interview on March 11. “Large miners have every reason to vote the size up to push their competition out of business.”
Todd’s argues that right approach to easing the congestion is to make the blockchain more efficient.
Ver dos not agree, saying Todd’s proposed solution — SegWit — does not fix the real problems.
“Say you haven’t had any water to drink for a day and a half, and you also need a haircut. Do you drink some water or go to the barber shop? SegWit is like going to the barber shop. If bitcoin is more expensive or slower than traditional financial systems, people aren’t going to use it.”
What happens next is up for grabs. If BU can attract enough users, then plans to upload the software upgrade can go through. If users like Todd reject that approach, bitcoin could fork off into the limited and unlimited versions.